Yesterday, the American Airlines flight from Dublin to Charlotte, North Carolina, was jammed. There were five flights leaving Dublin airport for the United States between 8am and 9.30am. The very friendly American immigration official at the US immigration in Dublin told me that 3,000 people travelled from Dublin to the States on average every morning. That’s a huge amount of people and, obviously, it only gauges the punters going one way. There must be a similar number coming the other way. He told me that when college term is finished, that figure will go up to 5,000 leaving Ireland for the US every morning.
The majority of people on my flight were US tourists heading home after spending time in Ireland. Americans from all over the US are coming here and they are not just from the traditional heartlands of the Irish North East. In short, lots of Donald Trump supporters, who believe in the right to bear arms, are coming here too.
The special relationship between Ireland and the US is becoming more and more significant and this will not change if Trump wins the election, which looks less remote by the day.
As the US economy has recovered in recent years, we’ve seen a big rise in the number of Americans coming here. Last year, the US figure jumped by 14.7pc to 659,200 visitors while this contrasts with an overall figure of 11pc growth in all visitors. The renewed interest from Americans has helped drive the total record figure of 3,876,200 visits to the country last year.
Of course, visitors are only one example of the deep bonds we have with the US; the other obvious one is direct foreign investment.
US direct investment stock in Ireland totalled a record $310bn in 2014, according to data from the US Bureau of Economic Analysis (BEA). Ireland’s share of US investment stock in Europe has soared over the past decade, with Ireland’s share amounting to 11.1pc of the total in 2014 versus 6.2pc in 2004.
US investment flows to Ireland surged to a record $58.1bn in 2014. Ireland performed strongly within Europe during 2015, accounting for nearly 20pc of total US investment flows to Europe in the January-September period. The comparable shares for France and Germany were 3pc and 2pc, respectively.
Ireland’s investment stakes in the US are also significant, with Irish affiliates estimated to have generated some $90bn in sales from their US operations in 2014 and $35bn in US economic output. Whether through rising output, employment, or R&D expenditures – Ireland’s local presence in the US bestows a host of benefits to that country.
We are two nations intertwined. Ireland is a significant part of the American supply chain and we have to be aware of that.
Since 2008, Ireland has been second only to the Netherlands in attracting more US investment flows to the eurozone on a cumulative basis. However, the UK remains the king of inward investment, receiving almost one euro in every three invested into Europe.
This fact undermines the notion that the euro is the reason for US and other international flows into Ireland. Obviously, if being in the euro were a significant factor, the UK with its sterling would suffer – but it doesn’t.
The reason the US companies are here has little to do with the currency and is more cultural, linguistic and tax-based – and, of course, there is the obvious fact that they have been making money here for a long time and this track record speaks for itself.
And the links are getting deeper. Corporate America does not just produce in Ireland, it banks in Ireland – this is evidence of the profundity of the commercial links between both countries.
Yesterday, Bloomberg reported that Ireland emerged as America’s fourth-largest creditor, following China, Japan and the Cayman Islands, after the US government revised the way it reports the figures.
Investors in Ireland owned $264.3bn of Treasuries at the end of March, based on official data issued on Monday – less than $1bn off a record high of $265.1bn in December. China is the biggest holder of US bonds with a $1.24 trillion stake. Japan is next with $1.14 trillion, followed by the Cayman Islands with $265bn.
How could this be?
The answer is in the IFSC. Corporate America makes profits in Ireland which it doesn’t want to repatriate to the US because the companies will have to pay the difference between the Irish 12.5pc corporation tax and the 30pc in the US. Therefore, they choose to keep the money in Ireland and put it on deposit in American banks in the IFSC. They “park” the money in the safest asset they know, which is US government debt. And they do this via the IFSC in Dublin.
So it’s not Irish people who are financing the US government. What is happening is that US companies are financing the US State through their Treasuries in Dublin.
The fact that this huge trade is going through Ireland is something we should note. The benefits of Ireland are small compared to the benefits to both the US companies and indeed the US government, which is being financed by these companies.
In the years ahead, our relationship with the US is going to be deeper. We are not really a European economy but part of the US world game, with a European passport.
If the Brits decide to leave the EU and this undermines the UK as a location for investment (as the official view suggests), then some of the US investment in the UK will be diverted. If this is the case, where will this investment be diverted to? Ireland is an obvious answer.
When we stand back, it is clear that our strongest strategic economic relationship is the one with the US. This will not change whoever is in the White House. Trump talks about building walls and bringing US companies home but in truth he will not be able to get this through Congress, so it will just become another “elite” target to sloganeer against.
He fully understands this, but having permanent “bogeymen” to rail against is part of the Trump strategy. This won’t change if he wins office.
As for Brexit, we could win big if it’s a vote to leave. But you wouldn’t think that from listening to the Government’s efforts to agitate for a ‘Remain’ vote. Not for the first time, Official Ireland has misread the situation.
1. Official Ireland is not interested in our interest. Because Official Ireland is a ponzi scheme built on lies, obedience and control. And that type of arrangement always relies on a “Big Brother” to provide (legislative and financial) muscle. 2. Yes, we can win big – by joining Britain in exitting the increasingly dysfunctional, centralist, control obsessed EU. 3. 100 years ago one part of Ireland was fighting to prevent Europe becomming subservient to a floundering, error prone Kaiser. And the other wanted to stop Ireland particitpating in the British Empimperial racket. Today, we are subservient to a continental wide… Read more »
By the way, you metioned the US presidential election. Currently, we have one overpaid quangocrat after another queueing up to insult Trump, describe Sanders as a quaint irrelevance, and another Clinton as deserving of reverence. Trump wants the jobs to return to America, and Sanders wants the money to return to America. Both are serious threats to Official Ireland. Which explains the official position of Official Ireland. It all comes down to income. Official Ireland is overpaid, and underperforming. And very often un-necessary. We do not need hundreds of quangos. And the greatest crime of the “recovery” was that there… Read more »
http://alberttapper.blogspot.ie/2016/05/bet-leave-at-114.html
Would Irish politicians lobbying for the Brits to leave the EU, so Ireland could get more US business really encourage the Brits to vote to leave? By lobbying for the Brits to stay, the Irish look like good Europeans to Brussels; and may actually annoy some Brits enough so they vote to leave. On another point, David McWilliams has repeated several times in various posts that Ireland is really a part of some greater Anglo Empire. But the facts just don’t back that up. Ireland exports more to mainland Europe than anywhere. While the US is the leading single destination… Read more »
If Britain exits the EU, then Britain will be on a journey that Britain has travelled before. As a beacon for freedom, and an example to others to aspire for more freedom. Magna Carta, and the Swiss approach to government were liberation. long before the age of revolution (which turned out to be a fraud). Churchill’s “this is not the begining of the end, but this is the end of the begining” come to mind. Nelson’s frigates smashing French ambitions to cut Britain off, and the same frigates supplying freedom fighters aligned to Wellignton. The spitfires breaking the monopoly of… Read more »
Thank you E. Kavanagh. Your analysis is correct. And btw the Brits lose either way. If they leave they lose economically and if they stay they lose standing. They will never again be trusted within the EU because they have demonstrated what they have always been, a very selfish nation.
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As for David’s jingoistic view of Britain in the world, I lived in the US for almost 40 years and his notion of America as being part of an ‘Anglo’ Empire is laughable. Most Americans consider Britain as a joke, cute and quaint, but a joke. To attribute any part of America’s greatness to Britain is an insult. In fact the American work ethic and general personality is more German than British. The greatest number of immigrants were not British nor Irish, they were in fact German. The choice between English and German as the official language of the United… Read more »
The US is not the cliched entity that we are led to believe.
It is a complicated society.
It’s people are friendly and courteous.
It’s politicians are like politicians the world.
Why do they like Ireland and the Irish.
There is no single answer but some of the things they like about us are-
Hardworking
Friendly
Our accents strangely enough.
Just a word of caution on David’s statistics of people travelling in and out of Dublin to the US every day. He may have wanted to emphasise the close relationship between Ireland and his ‘Anglo’ America or he may not be aware that many of those passengers use Dublin as a Pan-European transatlantic hub. I know from personal experience as a frequent traveller on those routes and by friendly conversations with fellow passengers, that many if not most use Dublin as a European hub. I think that more and more we need to start thinking of Dublin in that way,… Read more »
Seeing that Mrs. T was mentioned, I feel it only right to recommend the following as one of the reasons why she knowingly accepted so many of her cabinet ministers being Paedophiles ; Search Terms ; thatcher grantham groper https://www.google.com/?gws_rd=cr&ei=3c89V6KzFuONmwXM3JiYCw&fg=1#q=thatcher+grantham+groper e.g. https://www.google.com/?gws_rd=cr&ei=3c89V6KzFuONmwXM3JiYCw&fg=1#q=thatcher+grantham+groper Of course the Irish Secret Service must have known all about this too. Ultimately, Maggie Thatcher was a Puppet of Sir Keith Joseph [ “Confirmed” Bachelor ] & Victor Rothschild. The real love of her life is said to be her S & M tryster ; Airey Neave “Officially” assassinated by IRA in car bomb at high security… Read more »
That horrifying tragic event with EgyptAir – I do not know what to think of that. If it was a bomb – how the hell can one smuggle a bomb on-board of the aircraft? All those security features we have at our airports, all those gates, scans, waiting – are they saying that we are equally as safe with it or without it? I know that detonators do not need much metal components as there are a number of powders that can be used as components of secondary explosives (such as organic peroxide compounds), though I guess that electric batteries… Read more »
I agree 100% with Deco and tony_murphy. Britain will of course prosper outside of the E.U if the British People make the wise decision to Vote in favour of an exit. If this occurs P.M Cameron is going to lower his Tax base in order to attract huge investment into the country and therefore Britain will not have to abide by any E.U directives on Corporation tax laws. If this does happen i can see a situation arising where Ireland will lose its big Companies like GlanBia and Greencore to London… I can only hope and pray that Ireland will… Read more »
The special relationship between Ireland and the US is becoming more and more significant and this will not change if Trump wins the election, which looks less remote by the day.”” Really, says who? https://www.google.ca/search?q=Trump+wins+the+election%2C+which+looks+less+remote+by+the+day.%22%22&oq=Trump+wins+the+election%2C+which+looks+less+remote+by+the+day.%22%22&aqs=chrome..69i57&sourceid=chrome&ie=UTF-8 As the US economy has recovered in recent years, we’ve seen a big rise in the number of Americans coming here. Last year, the US figure jumped by 14.7pc to 659,200 visitors while this contrasts with an overall figure of 11pc growth in all visitors. The renewed interest from Americans has helped drive the total record figure of 3,876,200 visits to the country last year.… Read more »
http://www.globalresearch.ca/economic-recovery-for-the-u-s-middle-class-significantly-less-purchasing-power-than-before-the-2008-financial-crisis/5403937
“2008 certainly did not destroy our economy.
But it did cause an immense amount of damage that we have never recovered from.
Now the next wave is approaching, and most people don’t even see it coming.”
The original source of this article is The Economic Collapse
http://www.bloomberg.com/news/articles/2016-05-18/banks-sued-over-manipulation-on-9-trillion-agency-bond-market
Hedge funds are not seeing a recovery in the US or in the world in general from what I have been reading. What are hedge funds seeing? Mike Savage Weekly Article May 17, 2016 Ray Dalio is a billionaire hedge fund manager who has made his fortune by seeing opportunity in markets and acting upon his findings. In a recent quote he said “If you don’t own gold you know neither history or economics”. WOW! Stan Druckenmiller, who has made his name by investing in stocks and soundly outperforming the indexes for 30 years, two weeks ago at an investment… Read more »
If the deep bonds between Ireland and the US do not extend beyond either tourism or economic pragmatism then the bonds are probably better described as chains, as our national sovereignty becomes evermore captive to corporate maxims. But who really benefits from any encounter with the (US) corporate machine? What benefit do the people get save some overflow might drip down from the master’s over-full cup of greed. However our bonds with the US are also deeply rooted in what might be called classical liberalism or the drive towards an ever further understanding of and realisation of the rights of… Read more »
The real option for Ireland is to exit the EURO regardless of the Brexit vote or risk going down with the ship which is already torpedoed. The EURO and Eurozone is a basket place. As usual, Debt is the problem and money printing has simultaneously increased the Debts by multiples since 2008. https://www.google.ca/search?q=graph+of+world+debts&espv=2&biw=1600&bih=755&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwiP266V9-fMAhWr54MKHVwdBJwQsAQIMA https://www.goldmoney.com/the-eurozone-is-the-greatest-danger?gmrefcode=gata “World-wide, markets are horribly distorted, which spells danger not only to investors, but to businesses and their employees as well, because it is impossible to allocate capital efficiently in this financial environment. With markets everywhere disrupted by interventions from central banks, governments, and their sovereign wealth… Read more »
To get to the nub of what is wrong with Europe. A few years ago, Sarkozy came to Ireland, to lecture the Irish on the need to join the superstate. [ “more Europe”, etc… ]. Anyway, there was a French national who was working as a chef in the West of Ireland.. He pelted Sarkozy’s car with eggs. [ most French people living in Ireland have a very negative view of French politicians]. He was brought before the court, and fined 180 Euro. Ireland’s version of the Common Law – a small fine for throwing food at somebody’s property. Under… Read more »
Finally, some steps to fix the residential housing shortfall. http://www.independent.ie/business/personal-finance/property-mortgages/3000-new-homes-to-be-built-in-middle-of-dublin-city-34731683.html And in the right location. With infrastructure. With transport. And commercial developments to service the people’s needs. People centred, not illusion centred. And most importantly – not in County Carlow, or some other location that is 90minutes plus from the area of economic activity. Build Up – the best option. Time for a serious vision of integrated development. Residential developments at high density in locations along the two rail lines going into the city, from the NW and SW. With DART transport on those lines. It does not take an… Read more »
There is a stage managed photo in the link below, that is like something from 1980s East Bloc Europe, with the Commissars standing around admiring plans for a new factory to make steel plant. http://www.independent.ie/business/irish/irish-financial-offering-isnt-geared-up-to-reap-a-brexit-benefit-conference-told-34731264.html David thinks that Ireland needs yet more foreign investment. Yet, the fact is that unless the (presumed) movement occurs to Sligo/Leitrim/Donegal Ireland is completely unprepared for a “THEORETICAL” scenario which is based on loaded assumptions about Britain not being serious about competitiveness. Dublin’s inability to build upwards, and CIE’s legendary incompetence (accentuated today, due to a Luas strike) and that mess that is unfolding with… Read more »
David, the Luas strike deserves an article.
http://mobile.nytimes.com/2016/05/22/business/international/brexit-referendum-eu-economy.html?_r=0&referer=http://www.google.co.uk/
Brexit is something that has massive political significance, but much less economic significance. Either way, the economy will adjust. German motoring executives will make sure that Britain gets accommodated amicably, regardless of what the politicians say. Basically, business will make sure that this will be managed easily. Just look at the supply chains between Germany and Switzerland. I think we will leave out France and Switzerland because Geneva is loaded up with French capital that is leaving France. Lots of bluster beforehand, and later acceptance. Here are two issues that are of greater medium term significance than Brexit. 1. The… Read more »